reinvesting poker profits to avoid taxes

[Wake up CALL]

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I don't pay taxes except on non duty-free liquor.

I don't hold the most expensive passport in the world.

I don't care about your stupid opinion.

[/ QUOTE ]

Nor should you, but you should not proffer terrible and illegal advice to others when it is the opinion of the IRS that really matters here, not mine and certainly not your uninformed and inaccurate opinion.

[Baulucky]

[ QUOTE ]
proffer terrible and illegal advice

[/ QUOTE ]

Only terrible and illegal in your mind. Thousands of rich people doing exactly this. I yield. The only cure for stupidity is death. Have it your way.

[JohnnyHumongous]

[ QUOTE ]
[ QUOTE ]
proffer terrible and illegal advice

[/ QUOTE ]

Only terrible and illegal in your mind. Thousands of rich people doing exactly this. I yield. The only cure for stupidity is death. Have it your way.

[/ QUOTE ]

I think the primary drawback of your plan is you have to live in Dominica. Taken to an extreme, is it worthwhile to make $5 billion a year if you have to live on Mars?

[Mr. Now]

1-Buy Dominica citizenship. (approx. $100K). Nice island in the caribbean with British type law.
2-Move there.
3-Pay this year's U.S. taxes.
4-Give up U.S. citizenship.

<rant>

....not quite.

4a. Pay taxes for 10 years as if you ARE STILL a citizen;
4b. Pay gains tax on your US real estate, as if you sold it, even if you do not;
4c. NEVER BE ALLOWED BACK INTO THE USA without explicit permission from the Feds.

...great idea on paper, ya.

References:

http://answers.google.com/answers/threadview?id=777267
http://www.irs.gov/businesses/small/...onal/article/0,,id=97245,00.html

</rant>

[xwillience]

OP- Whether or not you realize it you are already doing it. Your income is what you pay yourself for playing. So if your playing 25/50 NL and paying yourself 3k an hour, your paying taxes on 3k an hour. whether your roll increases or decreases. When you play poker and dont pay yourself the winnings, or you win 7k/hr but only pay yourself 3k, your "reinvesting" your income. You wont pay taxes on 4k of that until you actually take it out.

When a business does it, its just called retained earnings and the share holders dont pay taxes on it because they didnt get it.

in reference to RDPD, its been a while since i read it, but in real estate if you keep rolling over the money into future investments, like right away, you dont have to pay taxes on it. that is until you actually sell the house and put the money in the bank. In theory, you could buy a house, roll it several times, and keep increasing your net worth with bigger and bigger houses, and eventually just end up living in the final house without ever paying capital gains taxes.

[DesertCat]

[ QUOTE ]
When you play poker and dont pay yourself the winnings, or you win 7k/hr but only pay yourself 3k, your "reinvesting" your income. You wont pay taxes on 4k of that until you actually take it out.

When a business does it, its just called retained earnings and the share holders dont pay taxes on it because they didnt get it.


[/ QUOTE ]

In the U.S. the IRS insists that the corporation pay taxes on the earnings before they are retained, so "retained earnings" represents only after tax earnings. And it's the same for poker players, you can't "retain" some of your earnings to avoid taxes, you have to pay taxes on all of your earnings (minus legitimate expenses).

[scotchnrocks]

How does the IRS go about forcing one to pay taxes for 10 years if he holds no accounts in the US? They can freeze overseas accounts on someone who is not a US citizen?

[DesertCat]

[ QUOTE ]
How does the IRS go about forcing one to pay taxes for 10 years if he holds no accounts in the US? They can freeze overseas accounts on someone who is not a US citizen?

[/ QUOTE ]

Theoretically they can have you extradited back to the U.S. for tax fraud, and your accounts seized. I'm not sure how realistic it is, they'll have to show you did it for tax reasons and if you are a small fry, they may have no idea you did so. If you are very wealthy, they'll just assume the worst and make you prove you didn't.

And even if they can't force you to pay, the IRS could bar you from re-entry into the country. Even if you do it properly I think you are limited to less than 180 days in the U.S. each year if you surrender your citizenship, or they'll try to start taxing you again.

Now, I'm not a tax lawyer(and neither is anyone else on this board as far as I'm aware). These are just warnings so people understand that it's not easy, and there are potentially very serious repercussions. Talk to a tax attorney who has a real working knowledge of the cases and history if you are serious about it.